Elliot Wave: EURUSD Is Ready For a Massive Bullish Reversal
The bears have been in control of EURUSD during most of 2018 and still maintaining the authority in 2019, as well. The EURUSD declined from its February 2018 high of 1.25534 to as low as 1.10310 in July 2019. The bears can be proud of the total gain of over 1500 pips they managed to achieve. Unfortunately, “no trend lasts forever.” After such an intense sell-off contentment can start to settle in. This can often be dangerous, especially since the evidence shows that a significant bullish reversal is around the corner.
The weekly chart visualizes the entire behavior of the EURUSD’s since the low of 1.03428 in January 2017 into Elliott Wave context.
The first significant reason not to join the bears right now is the completed bullish 5-3 wave cycle. The advance to 1.25569 can be seen as a five-wave impulse labeled 1-2-3-4-5. The sub-waves of wave 3 is also visible, and it’s also the most extended wave among the 1, 3, and 5.
EURUSD Bears Are So Vulnerable Now
The theory states that every impulse is followed by a correction of three waves in the opposite direction. Here, EURUSD seems to have drawn a textbook A-B-C zigzag correction with an ending diagonal in wave C. Once the corrective phase of the cycle is over, the larger trend resumes in the direction of the impulsive sequence.
The second reason not to trust the bears is the fact that wave C is already retested the 61.8% Fibonacci level, where second waves often terminate. Besides, wave C also equal 0.618 of wave A, one of the characteristics of zigzag pattern
And the third, but important evidence supporting the bullish thesis is that prices are rejecting the lower trend line and forming bullish price action signals.
In conclusion, there is plenty of indication that the bears have been overstaying their welcome for a while now. If this analysis is correct, a notable bullish reversal can soon be expected in EURUSD. Given that wave (3/C)’s initial targets lie above the top of the wave (1/A), we think sellers should exercise extreme caution.
What is your view on EURUSD? Let me know in the comment.
The weekly chart visualizes the entire behavior of the EURUSD’s since the low of 1.03428 in January 2017 into Elliott Wave context.
The first significant reason not to join the bears right now is the completed bullish 5-3 wave cycle. The advance to 1.25569 can be seen as a five-wave impulse labeled 1-2-3-4-5. The sub-waves of wave 3 is also visible, and it’s also the most extended wave among the 1, 3, and 5.
EURUSD Bears Are So Vulnerable Now
The theory states that every impulse is followed by a correction of three waves in the opposite direction. Here, EURUSD seems to have drawn a textbook A-B-C zigzag correction with an ending diagonal in wave C. Once the corrective phase of the cycle is over, the larger trend resumes in the direction of the impulsive sequence.
The second reason not to trust the bears is the fact that wave C is already retested the 61.8% Fibonacci level, where second waves often terminate. Besides, wave C also equal 0.618 of wave A, one of the characteristics of zigzag pattern
And the third, but important evidence supporting the bullish thesis is that prices are rejecting the lower trend line and forming bullish price action signals.
In conclusion, there is plenty of indication that the bears have been overstaying their welcome for a while now. If this analysis is correct, a notable bullish reversal can soon be expected in EURUSD. Given that wave (3/C)’s initial targets lie above the top of the wave (1/A), we think sellers should exercise extreme caution.
What is your view on EURUSD? Let me know in the comment.
